“M.Video” is compacted – Newspaper Kommersant No. 57 (7502) dated 04/04/2023

The network of electronics stores M.Video announced that it resumed expansion in the regions through small stores with a display of goods in several tiers. The company claims that opening outlets with an area two to three times smaller than usual requires three times less investment. Experts note that standard-format stores were calculated to create brand zones for companies that had already left Russia.

The M.Video-Eldorado chain has completed purchases related to the opening of stores of the new M.Compact format, according to the data of the company’s own trading platform. According to requests published from December 2022 to March 2023, the company ordered the design and construction of at least seven stores of this format.

M.Video-Eldorado confirmed to Kommersant that they were “testing the format” of stores with an area of ​​500-600 sq. m. m with a standard for “M.Video” 1000-1500 sq. m: “We have already opened three such stores – in Moscow, Zelenodolsk and Kazan.”

The assortment in M.Compact stores will be comparable to that in standard stores. But for them, vertical trading equipment is used, which allows you to display equipment in several tiers. The opening of M.Compact outlets requires three times less investment than standard stores, said Boris Ogarkov, director of network development and operation at M.Video-Eldorado: “Shops can reach the target level of profitability in the first year of operation.”

According to the procurement information, M.Video expects to open M.Compact outlets both in cities where the network is already represented by standard stores, and in regional centers where they still do not exist. In particular, in March 2023, M.Video-Eldorado requested proposals for the design and construction of stores in Kamensk-Uralsk (Sverdlovsk Region), Ishimbay (Bashkortostan) and Votkinsk (Udmurtia).

In the first two cities, according to hh.ru, the company opened vacancies for the position of director of a hypermarket. M.Video-Eldorado confirmed to Kommersant that the group “resumed expansion into the regions” and is preparing to open stores in Ishimbay and Votkinsk.

The group has already experimented with smaller stores: in 2021, it opened Eldorado 250 outlets with an area of ​​250–500 sq. m. Shops of this format continue to work. Neither M.Compact nor Eldorado 250 differ in branding from other standard chain stores.

Small format outlets are organized differently, for example, at small DNS stores (using the DNS Smart brand) and Citylink (Citylink-mini, they only work to issue orders from an online store). Citilink told Kommersant that about 15-20% of issued orders fall on small-format outlets.

Electronics stores of a standard size were built with the expectation that companies like Apple and Samsung would finance the creation of brand zones, Fintech Lab analyst Sergey Vilyanov noted: “Now this is not the case: brands from China and India are ready to pay, but an order of magnitude less.” He noted that the DNS already practices the display of goods in several tiers: “This format, firstly, creates the impression that there are a lot of goods on the shelves, and secondly, it allows suppliers to sell the space they need on the shelves, like in grocery stores.”

For M.Video, at the moment it would be logical to reduce the area of ​​existing stores, says Telecom Daily CEO Denis Kuskov: “A fairly large number of stores take up unnecessary space, and priority display racks are empty.” He adds that overstocking is already observed in the consumer electronics market – in particular, in the laptop segment (see Kommersant on February 13): “In the future, two or three years, it is unlikely that it will be possible to return to the market volume of the level of 2021.”

Mr. Kuskov called the expansion of the network of stores in small towns a winning option: “Marketplaces take part of the sales from retail stores, but it is still important for consumers to physically test the equipment before buying.”

Yuri Litvinenko